The billionaire founder of outdoor apparel brand Patagonia, known for its environmental causes, says he is giving the company to a trust that will use its profits to fight the climate crisis.
Yvon Chouinard, 83, who became famous for his alpine climbs in Yosemite National Park and has a net worth of $1.2bn, could have sold the brand – valued at $3bn, according to the New York Times newspaper – or taken it public. He announced this on Wednesday.
Instead, he, his wife and their two children agreed to transfer all of Patagonia’s voting shares, or stock that entitles the holder to vote, to a trust in charge of ensuring the brand’s environmental values at the company are respected.
All non-voting shares of Patagonia have been transferred to a non-profit organization dedicated to fighting climate change and nature protection and conservation. The company’s profits will also be donated to non-profit donors.
“The Earth is now our sole shareholder,” Chouinard wrote in an open letter posted on Patagonia’s website on Wednesday.
“I never wanted to be a businessman,” he explained. “I started as a craftsman, making climbing gear for my friends and myself, then started making costumes.”
He added: “As we began to see the scale of global warming and environmental destruction, and our own contribution to it, Patagonia committed to using it to change the way our company does business.”
Founded nearly 50 years ago, Patagonia quickly became committed to preserving nature, carefully selecting raw materials and donating one percent of its sales each year to environmental non-governmental organizations, or NGOs.
But Chouinard decided this was no longer enough.
One option was to sell Patagonia and donate the money. “But we are not sure that the new owner will maintain our values or keep our team of people around the world working,” he said in the letter.
Taking the company public would have been a “disaster”, he said: “Even well-intentioned public companies are under a lot of pressure to make short-term gains at the expense of long-term viability and accountability.”
Patagonia will remain a company, looking after its financial health and working with a board of directors and CEO.
The Chouinard family will no longer receive any money from the company but will remain on the board, overseeing the trust and guiding the nonprofit’s philanthropic work.
Following the announcement, Patagonia’s board members celebrated the decision.
“Instead of using natural resources to provide returns to shareholders, we are turning shareholder capitalism on its head by making the Earth our sole shareholder,” board chairman Charles Cohn said in an open letter.
“As a closely held company, this big change was easier for us than others. But the point is that companies must follow transparent purpose commitments that make sense to their business and be held accountable to their communities,” he added.